AVD: ad valorem stamp duty on Hong Kong property
Ad valorem stamp duty (AVD) is the tax you pay on every Hong Kong property purchase. "Ad valorem" means it is calculated as a percentage of the property's price or market value (whichever is higher), not a flat fee. The rate you pay depends on your buyer status and the property's value. For residential property, the rates are the same for most buyers as of 26 February 2026, but the structure uses a tiered system with marginal bands that can trip up even careful buyers.
How AVD works: the core mechanism
AVD is charged on the higher of two figures: the actual purchase price you pay, or the property's market value as assessed by the Inland Revenue Department (IRD). This means you cannot reduce your duty by under-declaring the price. The IRD will use its own valuation if it believes the market value is higher.
The duty is not a single flat percentage. Instead, it uses a progressive band structure with "marginal relief" at the boundaries between bands. This means that as the property price crosses a threshold, the duty jumps in a way that can make a slightly more expensive property cost less in total duty than a cheaper one — unless you understand the relief mechanism.
Scale 1 and Scale 2: why two scales existed
Before the 2024 changes, Hong Kong had two separate scales for residential property:
- Scale 2 (lower rates): Available only to a Hong Kong permanent resident (HKPR) buying their first residential property in Hong Kong, with no other property owned.
- Scale 1 (higher rates): Applied to everyone else — non-HKPRs, companies, and HKPRs who already owned another property.
The difference was material: Scale 1 rates were significantly higher than Scale 2. However, the exact Scale 1 percentage before the 2024 changes has not been verified for this guide. For historical rates, refer to the IRD's rate tables directly.
As of 26 February 2026, Part 1 of Scale 1 and Scale 2 now carry the same rates for residential property. This means the distinction between the two scales for residential property is effectively removed — the same band structure applies to all buyers. The Stamp Duty (Amendment) Ordinance 2026 raised the top residential rate from 4.25% to 6.5% for consideration above $100,000,000, effective from 26 February 2026.
Current residential AVD rates (effective 26 February 2026)
The table below shows the full band structure for residential property under Part 1 of Scale 1 and Scale 2. Note the marginal relief rows: these are the bands where the duty is calculated as a flat percentage of the entire consideration, not just the excess over a threshold. This prevents the duty from exceeding the property's value at the band boundaries.
| Consideration / Market value ($) | AVD payable |
|---|---|
| Up to $4,000,000 | $100 |
| $4,000,001 – $4,323,780 | $100 + 20% of the excess over $4,000,000 |
| $4,323,781 – $4,500,000 | 1.5% |
| $4,500,001 – $4,935,480 | $67,500 + 10% of the excess over $4,500,000 |
| $4,935,481 – $6,000,000 | 2.25% |
| $6,000,001 – $6,642,860 | $135,000 + 10% of the excess over $6,000,000 |
| $6,642,861 – $9,000,000 | 3% |
| $9,000,001 – $10,080,000 | $270,000 + 10% of the excess over $9,000,000 |
| $10,080,001 – $20,000,000 | 3.75% |
| $20,000,001 – $21,739,120 | $750,000 + 10% of the excess over $20,000,000 |
| $21,739,121 – $100,000,000 | 4.25% |
| $100,000,001 – $109,574,470 | $4,250,000 + 30% of the excess over $100,000,000 |
| $109,574,471 and above | 6.5% |
Source: Inland Revenue Department (IRD), effective 26 February 2026.
Marginal relief explained
The marginal relief rows are the bands where the duty is a flat percentage of the entire consideration, not just the excess. For example, between $4,323,781 and $4,500,000, the duty is a flat 1.5% of the whole price. This is because the progressive calculation in the previous band would produce a duty higher than 1.5% of the total — the relief ensures the duty does not exceed the property value at the boundary.
Without marginal relief, a flat at $4,323,780 would cost $100 + 20% of ($4,323,780 - $4,000,000) = $100 + $64,756 = $64,856. At $4,323,781, the flat 1.5% rate applies: 1.5% × $4,323,781 = $64,857 — almost identical. The relief smooths the transition.
Worked example: a hypothetical flat at $8,500,000
Suppose you are a Hong Kong permanent resident buying a residential flat for a hypothetical price of $8,500,000, with no other property owned. The price falls in the band $6,642,861 – $9,000,000, where the duty is a flat 3% of the entire consideration.
AVD = 3% × $8,500,000 = $255,000.
Now suppose the same flat costs $9,500,000. This falls in the band $9,000,001 – $10,080,000, where the duty is $270,000 + 10% of the excess over $9,000,000.
Excess = $9,500,000 - $9,000,000 = $500,000.
AVD = $270,000 + (10% × $500,000) = $270,000 + $50,000 = $320,000.
Notice the jump: at $9,000,000 the duty would be 3% × $9,000,000 = $270,000. At $9,500,000 it is $320,000 — a $50,000 increase on a $500,000 price rise. The marginal relief at $10,080,001 then switches to a flat 3.75% rate.
Non-residential property: Scale 3
Non-residential property (e.g. commercial, industrial, car parks) is charged under a separate scale, Scale 3, introduced on 26 February 2026. Scale 3 follows the same band structure as residential up to $21,739,120, then stays at a flat 4.25% with no higher band. This means non-residential property does not attract the top 6.5% rate that applies to residential property above $109,574,471.
What about BSD and SSD?
Buyer's Stamp Duty (BSD) and Special Stamp Duty (SSD) have both been abolished for residential property for any instrument executed on or after 28 February 2024. BSD previously applied to non-HKPR buyers and companies at rates of 15% (2012–2023) or 7.5% (2023–2024). SSD applied to sellers who resold within a holding period (up to 36 months). Neither is relevant for purchases on or after 28 February 2024.
What to check next
Before you commit to a purchase, confirm the exact AVD payable with the IRD's official stamp duty calculator or a qualified professional. The rates above are correct as of 26 February 2026, but the government can change them. Always verify the current bands and any reliefs that may apply to your specific situation — especially if you are buying non-residential property, where Scale 3 applies, or if you are a company or non-permanent resident, where the old Scale 1/Scale 2 distinction may still affect historical transactions.